Canada’s real estate market stands on stable footing. On average, healthy year-over-year house price gains were recorded during the first three months of 2008. While more modest price increases were observed when compared to previous quarters, the solid appreciations noted in the first quarter are largely due to the shared effects of resilient local economies, high immigration levels, and relatively low interest rates – all leading to enduring buyer demand, according to a House Price Survey report released today by Royal LePage Real Estate Services.
While almost all markets surveyed experienced price increases, it was the smaller cities, with relatively affordable housing and strong economies based on resource industries that emerged with the most significant gains. Thriving Saskatoon saw appreciation as high as 66 per cent, while areas in Newfoundland posted increases above 20 per cent for the first time since Royal LePage started tracking house prices.
Of the housing types surveyed, detached bungalows increased to $336,834 (+8.3 %), followed by standard two-storey properties, which rose to $400,647 (+7.1%), and standard condominiums, which increased in price to $240,423 (+6.9 %), year-over-year.
“Canada’s housing market remains on solid footing. With the notable exception of a handful of small western cities, the country has returned to an environment characterized by moderate house price increases,” said Phil Soper, president and chief executive, Royal LePage Real Estate Services. “These conditions are far more agreeable to those searching for a home, and are more sustainable in the long term than the sharp price increases recently experienced.”
Although slowing global economies have moderated the demand for Canada’s natural resources, export regions continue to enjoy stronger local real estate markets. Atlantic Canada is characterized by strong growth, as healthy provincial economies and oil expansion projects lead to high in-migration levels. In Saskatchewan, gold, diamond and uranium mining, along with prospering agriculture industries, have retained many would-be out-migrates, and the more moderate cost of living has also lured skilled workers from Alberta. Winnipeg’s growing population and robust economy is supported by the farming industry and the rising prices of grain.
Strong demand and rising house prices were also noted in cities not driven primarily by the natural resource sector.
Average house prices increased in Toronto and Montreal during the first quarter, while unit sales activity dipped from the same period last year. While there was a decline in unit sales volumes, the current activity levels in both cities are amongst two of the best first quarters on record for Toronto and Montreal.
It is worth noting that record snowfall in Central Canada and Quebec left many city streets and sidewalks virtually inaccessible to potential homebuyers during the first quarter. As a result, many sellers held off listing their homes, choosing to wait for more conducive weather for open houses and viewings.
Despite Alberta’s strong economy and continued buyer demand, house prices and market activity tempered from the frenetic pace that characterized the energy-fuelled province in the past few years. As global oil prices continue to fluctuate, some area buyers have grown weary of a housing market that is closely tied to the oil and gas sector. As a result, listing inventory and selling periods increased during the first quarter, while sales activity continued to normalize.
Helping fuel Canada’s housing market is its status as having the fastest population growth amongst the G-7 countries. This is a stabilizing force within the Canadian housing market and is critical for price appreciation in the longer term. Canada continues to attract a high number of skilled immigrants; while immigrants have typically gravitated to larger cities such as Vancouver, Montreal and Toronto, trends now illustrate that secondary cities requiring skilled workers are regarded as home to many newcomers.
In addition to steady population growth, the structure of Canada’s financial services industry, and the lending products they provide, has buffered the country from the credit issues that currently exist within the U.S. housing market.
Added Soper: “We know now that the Canadian real estate market has followed a markedly different path from that of the United States. Our tiny subprime mortgage market has exposed us to very few of the pitfalls that have created the unfortunate chaos south of the border. While Canada will not escape the negative impact of a troubled American economy, Canadians’ home equity should remain safe, as the market moves into a period of slow growth, but growth nonetheless.”
REGIONAL SUMMARIES
After years spent supplying Western Canada’s resource boom with much-needed labour, Atlantic Canadians are once again looking east to purchase property. In Halifax, housing prices increased in the first quarter, due in part to efforts by the provincial government and local businesses to entice younger residents to work and live in their native Nova Scotia. A slow trickle of skilled workers returning home from stints on ‘the patch’ in Alberta contributed to growing buyer demand and sustained market activity throughout the winter.
In Moncton, buyer demand pressured prices upward and contributed to overall balanced market conditions during the first three months of 2008. A steady supply of homes at virtually all price points continued to attract buyers into the city’s housing market – one that is still considered to be amongst the most affordable in Canada.
Prompted by the Intelligent Community Forum’s recent recognition of Fredericton as the world’s seventh smartest city, and ongoing growth in the public and technology sectors, year-over-year house prices continued to rise. House price appreciation was buoyed by the city’s strong sense of optimism about the future and sustained interest in the first quarter from both buyers and sellers.
Low unemployment and a strong provincial economy continued to bolster house prices in Saint John in the first quarter of 2008. Like many parts of Atlantic Canada, housing conditions in New Brunswick continue to benefit from a returning labour force and the ensuing augmented housing demand, particularly with properties in the $240,000 to $250,000 range. Regional refiner Irving Oil, and global oil and gas giant BP’s Eider Rock Refinery Project continue to move forward and have given many residents reason to be optimistic about the city’s long-term future and growth.
Steady in-migration from Maritime Canadians returning to Charlottetown after working out west continues to drive modest price appreciation for two-storey and bungalow properties. Condominiums, a relatively new property type in the area, continue to receive significant buyer interest from first-time buyers and retirees looking to live maintenance-free along the city’s waterfront – a factor that has contributed to the area’s sustained growth and healthy housing market conditions.
In St. John’s, the prospect of becoming a “have” province by 2009, as well as the provincial government’s announcement of an $881 million surplus triggered a rise in average house prices during the first quarter. Further expansion of Husky Oil’s White Rose project and potential development of a nickel deposit in Southern Head led to a rise in consumer confidence and double-digit house price increases, as the shift towards a sellers market continued throughout the city. Winter – typically a slower period for home sales in St. John’s – did little to decrease market activity in the first quarter. A shortage of desirable property listings, immigration and new listings lasting no more than two days on the market continue to characterize a market that is building on momentum created in 2007.
Montreal experienced near double-digit gains in average house prices during the first quarter of 2008, driven primarily by continued strong buyer demand and the affordable cost of borrowing money. While the province’s manufacturing sector experienced a troubling first quarter, the robust service sector has been able to offset the impact by absorbing a considerable amount of those who would be without jobs. Montreal’s economy remains relatively strong, and has helped position the province to be among the least affected by housing’s decreasing affordability.
In much of Ontario, weather impacted the first quarter housing market. Ottawa’s harsh winter led to a deceleration of housing market activity; however, average prices still experienced moderate increases. In years past, first quarter showing conditions fared far better for area homeowners, who, with less snow, were able to highlight desirable selling features. This year’s conditions, however, prevented many homeowners from staging open houses and deterred some sellers from listing their properties altogether, as viewings proved too much for many would-be buyers.
In Toronto, persistent buyer demand and limited inventory levels continued to pressure prices upward in the first quarter; however, activity levels were slightly down. Record snowfall in Toronto left many city streets and sidewalks virtually inaccessible to potential homebuyers during the first quarter. As a result, many sellers held off listing their homes, choosing to wait for more conducive weather for open houses and viewings. While Toronto’s real estate market performed a little slower than expected during the first quarter of 2008, it is likely to gain strength as it moves into the busy spring season. Despite decreased overall activity, some of the city’s neighbourhoods still received significant buyer interest, often resulting in multiple offer situations for well-priced, well-situated homes.
In Winnipeg, the housing market experienced double-digit house price increases and tight market conditions, caused by the combination of a severe lack of listing inventory and strong buyer demand. The province’s economy remained strong due to the combination of strong agricultural prices and Winnipeg’s continued stronghold on the aerospace industry and bus-manufacturing sector. With a brimming manufacturing sector, people are relocating from the west and emigrating from Europe to fill abundant job opportunities, further increasing buyer demand. With Winnipeg’s extremely limited housing supply, multiple offer situations occurred during most sales in the first quarter. Sales prices typically ranged from $10,000 to $30,000 above asking price, positioning the market strongly in the sellers’ favour.
In Edmonton, housing affordability continued to improve during the first three months of 2008. Despite a strong economy, consumer confidence began to waver as global oil prices continue to fluctuate; area buyers have grown weary of a housing market that is closely tied to the oil and gas sector. Following the spike in average house prices over the last few years, the more moderated conditions seen in the first quarter were anticipated. Employment levels in the area remain at all-time highs, which, when combined with low lending rates, positioned housing conditions slightly in the favour of area buyers.
In Calgary, first quarter housing market conditions were decidedly in favour of area buyers, many of whom took advantage of the city’s highest-ever housing inventory levels to make more deliberate home buying decisions. A 24-month period of rapid growth and an abundance of properties that were built to satisfy buyer demand are cited as some of the factors contributing to the city’s current high inventory levels.
In Saskatchewan, the momentum from last year’s red-hot housing market continued in the first quarter of 2008, pressuring average house prices upwards by more than 40 per cent in both Saskatoon and Regina. The dramatic spike in house price appreciation in Saskatoon and Regina can be directly attributed to the province’s rich natural resource sectors including oil, gold, uranium, diamonds and grain – commodities that are experiencing unprecedented global demand. In Saskatoon over the past 15 years, price increases crept up slowly; in 2006 prices increased by 10 per cent, while in 2007, prices shot up by 50 per cent. As a result, multiple offers were seen on a good percentage of homes in the first quarter.
Market activity in Regina echoed that of Saskatoon, as all housing types surveyed experienced significant year-over-year double-digit increases. Mirroring conditions in its sister city, swelling buyer demand also drove Regina’s housing market. The city’s economy is experiencing tremendous growth – from exploration projects to expanding infrastructure, Regina is readying itself for a brilliant future. In order to accommodate the burgeoning resource sectors, several corporations are expanding and creating an abundance of jobs; CP Rail is making a central hub in the southwest end of the city to manage increasing shipping demand.
House prices in Vancouver and Victoria continued to climb during the first quarter of 2008 due to strong local and international buyer demand. In Vancouver, the upcoming 2010 Olympic Games has added extra fervor to the already strong economy. The city’s high employment levels and relatively low cost of borrowing money continues to attract an in-flux of buyers to the market. While affordability in Vancouver appears to be decreasing, current rising wages and relatively low interest rates enable buyers to enter the housing market.
Victoria’s real estate market started the year on strong and stable footing, with average house prices rising by double digits during the first quarter, compared to last year. A strong local economy and low lending rates continued to draw buyers into the housing market.
FIRST QUARTER 2008 HOUSE PRICE SURVEY DATA CHART
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| Detached Bungalows | Standard Two Storey |
Standard Condominium | ||||||
| Market | Q1 2008 Average | Q1 2007 Average | Bungalow % Change | Q1 2008 Average | Q1 2007 Average | 2 Storey % Change | Q1 2008 Average | Q1 2007 Average | Condo % Change |
| Halifax | $207,333 | $190,000 | 9.1% | $246,333 | $200,000 | 23.2% | $152,000 | $144,000 | 5.6% |
| Charlotte- | $155,000 | $145,000 | 6.9% | $185,000 | $175,000 | 5.7% | $105,000 | $100,000 | 5.0% |
| Moncton | $152,000 | $138,000 | 10.1% | $135,300 | $132,000 | 2.5% | - | - |
|
| Fredericton | $160,000 | $156,000 | 2.6% | $197,000 | $187,000 | 5.3% | $126,000 | $131,000 | -3.8% |
| Saint John | $185,000 | $161,700 | 14.4% | $264,000 | $210,400 | 25.5% | $142,000 | $118,500 | 19.8% |
| St. John's | $164,000 | $145,000 | 13.1% | $229,333 | $200,000 | 14.7% | $173,333 | $148,333 | 16.9% |
| Atlantic | $170,556 | $155,950 | 9.4% | $209,494 | $184,067 | 13.8% | $116,389 | $106,972 | 8.8% |
| Montreal | $227,799 | $219,313 | 3.9% | $332,389 | $323,375 | 2.8% | $201,778 | $197,438 | 2.2% |
| London | $223,300 | $203,500 | 9.7% | $230,300 | $211,470 | 8.9% | $124,100 | $116,000 | 7.0% |
| Ottawa | $311,583 | $298,083 | 4.5% | $309,833 | $294,667 | 5.1% | $198,083 | $187,333 | 5.7% |
| Toronto | $432,679 | $388,921 | 11.3% | $544,150 | $503,778 | 8.0% | $298,662 | $279,442 | 6.9% |
| Winnipeg | $229,125 | $191,375 | 19.7% | $242,943 | $220,714 | 10.1% | $138,000 | $122,000 | 13.1% |
| Regina | $237,138 | $158,500 | 49.6% | $227,000 | $159,500 | 42.3% | $160,917 | $102,500 | 57.0% |
| Saskatoon | $340,000 | $226,250 | 50.3% | $395,000 | $257,500 | 53.4% | $220,000 | $155,000 | 41.9% |
| Calgary | $442,852 | $402,933 | 9.9% | $445,792 | $411,456 | 8.3% | $281,807 | $261,336 | 7.8% |
| Edmonton | $330,000 | $347,000 | -4.9% | $363,707 | $377,643 | -3.7% | $235,000 | $254,667 | -7.7% |
| Vancouver | $852,750 | $758,000 | 12.5% | $948,750 | $837,500 | 13.3% | $455,750 | $403,500 | 12.9% |
| Victoria | $439,000 | $384,500 | 14.2% | $460,000 | $418,000 | 10.0% | $294,000 | $248,000 | 18.5% |
| National | $336,834 | $311,108 | 8.3% | $400,647 | $374,114 | 7.1% | $240,423 | $225,006 | 6.9% |
The Royal LePage Survey of Canadian House Prices is the largest, most comprehensive study of its kind in Canada, with information on seven types of housing in over 250 neighbourhoods from coast-to-coast. This release references an abbreviated version of the survey, which highlights house price trends for the three most common types of housing in Canada in 80 communities across the country. A complete database of past and present surveys is available on the Royal LePage Web site at http://www.royallepage.ca/, and current figures will be updated following the end of the first quarter. A printable version of the first quarter 2008 survey will be available online on May 15, 2008.
Housing values in the Royal LePage Survey are Royal LePage opinions of fair market value in each location, based on local data and market knowledge provided by Royal LePage residential real estate experts. Historical data is available for some areas back to the early 1970s.
About Royal LePage
Royal LePage is Canada’s leading provider of franchise services to residential real estate brokerages, with a network of over 13,000 agents and sales representatives in 600 locations across Canada. Royal LePage is managed by Brookfield Real Estate Services, and is part of a brand family that includes Royal LePage, Johnston and Daniel, Realty World and La Capitale. An affiliated company, Brookfield Real Estate Services Fund, is a TSX listed income trust, trading under the symbol "BRE.UN."